Brussels, 09/10/2012 (Agence Europe) - The EU27 finance ministers meeting in Luxembourg on Tuesday 9 October found that 11 Member States want to go ahead with a financial transactions tax (FTT) using “enhanced cooperation” based on the draft directive unveiled by the European Commission in September 2011 (viz. a 0.1% tax on bond and share sales and 0.01% on derivatives, due to come into force on 1 January 2014 according to the Commission's plans).
Italy, Spain, Estonia and Slovakia have said that they will join the other member states (France, Germany, Austria, Belgium, Slovenia, Portugal and Greece) that have already told the Commission in writing of their FTT plans (see EUROPE 10699 and EUROPE 10704). This makes enough countries to meet the nine-country quorum needed for enhanced cooperation, explains the Cypriot Presidency.
The process will now have two stages. Once at least nine countries have officially expressed interest in writing, the Commission will evaluate the applications (later this month) to ensure the conditions for enhanced cooperation have been met, as laid down in the EU treaties (respect of the Single Market, for example). It will then unveil ahead of the November ECOFIN Council a draft decision to authorise the enhanced cooperation, which will need to be voted through by the EU27 by a qualified majority and then authorised by the European Parliament. Assuming this all gets the go-ahead, the Commission will decide on a timeline and unveil new formal draft legislation at the end of the year (probably based on its initial draft directive) which the countries in question can then negotiate. They must decide upon it unanimously. The talks are expected to be drawn-out because although the general idea is clear, the devil will be in the detail.
During the debate on Tuesday, the British finance minister, George Osborne, whose country is fiercely opposed to any FTT, said that he would not stand in the way of financial cooperation among other countries, but asked for details about its scope and potential impact on the EU27 (particularly the City of London).
Another key question is what will be done with the tax revenue. This was raised by Poland, which has said that it will not block enhanced cooperation but at a meeting in June said that it would only get involved itself if all the cash raised by the FTT went into the EU budget and if all the other participants explicitly said they agreed with this. This idea is opposed by Germany and others, which want FTT proceeds to remain in their own hands.
EU Taxation Commissioner Algirdas Semeta made it clear that the final destination of the revenue must be decided upon by the participating countries when the European Commission has unveiled its new proposals. He said that in another context, the Commission had recommended that some of the proceeds be paid into the EU budget and the contributions of the member states concerned reduced accordingly. This is also expected to generate heated debate because some countries, like the United Kingdom, oppose any changes to the way the EU is funded, while others, like Italy, think it is a good idea.
As to whether this plan by the 11 countries will encourage other member states to join them at some point and which countries might be interested, it is known that Poland, Hungary, Latvia, the Netherlands and Finland are not opposed in principle, but prefer to wait to see how things pan out to get clarity about the scope of the tax and its geographical coverage. (FG/transl.fl)